Financial Literacy in Rural Banking

Financial literacy in the present Indian policy context is seen as an instrument to raise demand for banking services. The location of the problem as one of deficient demand is untenable. The conception of financial literacy, as reflected in the Reserve Bank of India's Financial Literacy Guide, is packed with stereotypes of the poor as ignorant and in need of moral lessons on savings, consumption and credit. Financial literacy has to be positioned within a broader conceptual view of the financial system, so as to become a tool to raise critical consciousness and equip people to respond to the challenges posed by the financial sector. Further, financial literacy material must evolve from below, such that lives of the common people are organically a part of it. This paper also hints that the campaign mode for financial literacy might allow for greater public engagement and action. The effects of financial literacy, however, will not accrue if it is not accompanied by adequate outreach of banking services through credible public institutions.